On January 1, 2004, Zonal Company leased equipment to Ethan & Sons Co. for 8 years. The cost of the leased equipment was $110,000, and the fair value of the asset was $234,736.80. The lease required an annual payment of $40,000 at the beginning of each year. The interest rate implicit in the lease was 10%. Which of the following amounts should the lessor debit to Lease Receivable at the inception of the lease?
A. $234,736.80
B. $110,000
C. $213,397
D. $325,678.20
Answer: A
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